Friday, March 24, 2017

How to trade on Different time frame when the trend are different

February 1, 2016 by  
Filed under Forex FAQ & Latest Post


I have received a question from one of my blog reader asking me how should he trade the market with the 15 and hourly chart showing uptrend while the 4 hourly chart and daily chart showing downtrend.

I find this an interesting question as this situation often occur during trading especially for those of you who are trading the trend.

Indeed this can be a very confusing for a trader especially when you are new to trading.

Therefore I will like to use this post to share with you what I will do when I see such a situation in trading.

The best situation for a trader is when you see that the 15 minutes, hourly, 4 hourly and daily chart are all showing the same trend. What you need to do is to enter trades that are in the direction of the trend as it is always easier to trade in the direction of the trend than against it.

However there will be times where you will find that the trend of the higher time frame is opposite to the trend of the lower time frame which is what the reader experience.

So let me explain to you why you are seeing this.

If you take a look at your trading chart, you will see that the price is always moving in the form of waves and this is mainly due to the existence of support and resistance level.

We usually describe the wavelike movement as retracement and extension. The retracement is what we call correction but it is not a reversal in trend in that time frame.

For example, the trend of the daily chart is DOWN but it is currently showing sign of retracement.

Daily downtrend

If you go to the 4 hourly chart, you will see that the trend remains DOWN but the price started to move up

4 Hourly Downtrend

If you go to the hourly chart, you will see that the trend is now showing sign of UP

Hourly uptrend

If you go down to the 15 minutes chart, you will see that the trend is UP
15 min uptrend

If you are a day trader like me where our trades usually ends within the day or the next day, I will suggest that you follow the trend of the lower time frame.

However you should set a smaller target profit as the price can reverse anytime.

For me, I will set a 50 pips target profit for trades where the higher and lower time frame do not aligned.

When the upper and lower time frames are aligned, I will enter a higher target profits like 100 pips cos the price will move more when it is in the direction of the trend.

I hope that this post has answered your question and you can now trade even when the trend are different on different time frame.

 

 

 

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Comments

2 Responses to “How to trade on Different time frame when the trend are different”
  1. ajose says:

    i can not disagreed less you hit the point it can make different in many ways and improve trader skill also gains consistent profit if follow as you have stated.e.g 50 pips trade against higher time frame[daily,4hr]and 100 pips in the direction of major trend with entry on 15m times frame and it is triples screen method.may the lord continue to strengthen you as you enlighten us amen.

  2. moaied suhail says:

    thank you Lee, I agree with you and that was wise post.

    by applying S/R levels on the chart one can see the limit’s for take profit on retracement if entering against trends of higher time frame.

    all so looking at the last low of the previous structure will help to see if its good or late to go in the retracements.

    now as you said going in low time frame with the trend in higher time frame is safer and more profitable.

    best wishes to all

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